Rent increase after renovation in an apartment building: costs, subsidies and allocation

After a renovation, the rent in an Austrian apartment building cannot simply be increased by the amount shown on the invoices. The first questions are whether the work qualifies as maintenance or subsidised renovation, which subsidies reduce the cost base, and whether the correct route is a written agreement or the procedure under sections 18 et seq. MRG.

Each affected tenancy therefore needs its own calculation. The calculation must show the recognised cost, subsidies, financing, increase period and permitted amount for the individual unit. A general allocation across every apartment does not replace that review.

Classify the renovation costs before calculating rent

Section 3 MRG covers maintenance work on common parts, on rental units in the cases defined by the statute, and on shared facilities. Within its stated limits it can also cover technically suitable measures that reduce energy consumption. The classification must remain traceable for every cost item.

An improvement or voluntary modernisation does not qualify for an increase under section 18 MRG merely because it is useful. Where a project combines different types of work, the maintenance share must be separated from the improvement share. This prevents an entire contract from being allocated to tenancies without further review. The article on demolition termination in an apartment building provides a neighbouring project context for this distinction.

Subsidies change the cost base

Under section 3(3) MRG, the cost of maintenance work is covered from the principal-rent reserves of the preceding ten calendar years, including grants awarded on the occasion of the work. Section 18(1)(1) MRG also includes such a grant in the calculation. A subsidised amount must therefore not be counted again as an uncovered cost in the increase.

The data room should show the subsidy decision, payment, owner contribution, loan, conditions and possible repayment separately. A grant decision is not the same as a secure credit where conditions remain open. For a specific renovation risk, the article on remediation costs and contract risk in an apartment-building purchase illustrates why the cost assumptions and responsibilities should be settled before the rent calculation.

Time-limited agreement under section 16(10) MRG

Section 16(10) MRG permits a time-limited increase of the principal rent to cover maintenance, useful improvements and subsidised renovation measures. The agreement must be in writing. It must expressly state the amount and the period of the increase, and it is permitted no earlier than six months after the tenancy agreement was concluded.

For a fixed-term tenancy, the increase period must end before the tenancy expires. An agreement can remain effective for later tenants where the amount and period were disclosed to them in writing when their tenancy was concluded. This is an agreement with the individual tenant. It does not replace a decision under sections 18 and 19 MRG for a general increase.

Increase under sections 18 and 19 MRG for an uncovered cost

Section 18 MRG requires an imminent major maintenance work. The costs must not be covered by the principal-rent reserves or shortfalls of the preceding ten calendar years and must exceed the principal-rent income expected during the distribution period. The funding shortfall is derived from the cost and reserve calculation.

The increase is tied to the fixed distribution period, which may not exceed ten years. Section 18a MRG allows a decision in principle before the work is carried out and, where the landlord gives the required undertaking, a provisional increase. If the work is not carried out, the additional amounts collected under the provisional increase must be refunded with appropriate interest.

Collection requires a decision of the court or competent municipality under section 19 MRG. The application includes a quotation, the principal-rent accounts for the ten preceding calendar years, the schedule of rental units, the funding-shortfall calculation and a financing plan. An internal calculation does not create this authorisation.

Calculate the increased amount for each tenancy

An increase under section 18 MRG is not allocated as a flat percentage to the whole building. Section 18(1)(6) refers to the chargeable monthly principal rents of rented units, owner-used units and units left vacant despite being lettable. Under section 18(2), a lower actual principal rent is increased up to the amount shown for the unit, according to the funding requirement.

The property manager therefore needs the unit number, floor area, equipment category, current principal rent and chargeable amount for each unit. The principal-rent account under section 20 MRG also records the income and statutory expenditure of the calendar year. Service charges, voluntary improvements and unsupported expenditure must not be placed in the same calculation without review.

Align documents, tenant communication and the sale agreement

The review should bring together the renovation description, invoices and payment records, subsidy documents, financing plan, rent accounts, unit schedule and tenant correspondence. For an agreement under section 16(10), the signed individual agreement with start, amount and end is also required. For sections 18 et seq., the application, decision, procedural status and open orders must be added.

When an apartment building is sold, the agreement must state the status of the increase precisely. The parties should address amounts already collected, unfinished work, subsidy conditions, possible refunds, pending proceedings and the allocation of costs and duties from the effective date. An increase treated like permanent existing rent in the model can distort the purchase price.

Check duration and amount before the first collection

Before the first demand is issued, the owner must know which legal route was chosen, when the increase may begin, how long it applies and which amount is permitted for each tenancy. For an agreement under section 16(10), written form and an express period are decisive. For sections 18 et seq., the decision, distribution period and underlying cost calculation control.

If the estimated costs change or objections to the account emerge, section 19(3) MRG may require a recalculation for the remaining distribution period. The ongoing renovation file should therefore connect every invoice, grant, payment, change and rent demand to the current calculation. Receive new articles and legal updates through BRANDaktuellen Rechtsnews.